Wendy's Profit Grilled By High Beef Costs, Lowers Forecast

Wendy's swung to a first-quarter profit, even as rising commodity costs pressured its margins.

The fast food chain earned $12.4 million, three cents a share, after a $1.4 million loss a year ago. Excluding one-time items, Wendy's made one cent a share. Analysts expected earnings of three cents a share.

Higher input costs—particularly beef prices—constricted its margins, which fell from 13.4% to 11.8%.

Shares of Wendy's fell 3.3% to $4.71.

Wendy's recently dethroned Burger King as the country's second largest hamburger chain, an important victory for new CEO Emil Brolick, who took control last year. Brolick has laid out plans for new airier restaurants and a higher-end menu that would include items like the new Dave's Hot and Juicey Burger.

While top rival McDonald's grew through the recession, Wendy's fell saw its quarterly sales slip, from $901 to $615 million over two years. The company struggled to find its identity after founder Dave Thomas died in 2002; Brolick aims to change that, as America is embracing new fast food alternatives like Panera Bread and Chipotle.